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    August 12

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Pandemic forces change at Marks and Spencer's

BBC,

Added 21 May 2020

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Marks and Spencer's has seen a change in online shopping patterns. Below: The retail company has partnered with delivery service Ocado. (BBC)

London – Customers "may never shop the same way again" after the novel coronavirus (COVID-19) crisis, Marks and Spencer's boss has said.

"Whilst some customer habits will return to normal, others have changed forever," Steve Rowe said.

The pandemic has driven several changes, including a shift to online, customers cooking more from scratch and buying more casual clothing.

T-shirt bras and bathroom products online sales have risen, while it is barely selling any suits or ties.

The retailer has also found that as shoppers are visiting the shops less, they are planning what to eat further in advance, and also buying more herbs and whole vegetables.

It said that customers are buying bigger product packs, such as of strawberries or chicken. Sales of frozen items are also up by 75 per cent on the year in the UK.

M&S added that online shoppers were now browsing earlier in the day, between 3 p.m. and 5 p.m.

As more customers work from home, desktop visits were also up 38 per cent in comparison with the same period last year.

But M&S is one of the few big food retailers without its own internet-based delivery service.

This has hampered the chain as customers have needed to purchase items online during lockdown if they are self-isolating, for example.

However, the retailer's partnership with Ocado starts in September this year, replacing the online grocer's existing deal with Waitrose.

In a new announcement, M&S said the delivery service would also include over a thousand non-food items meaning customers will soon be able to buy cushions or underwear alongside their eggs or bread.

Rowe said that Ocado's strong performance during lockdown "further reinforced" the value of the deal for delivering groceries.

The impact of the virus lockdown has driven "effects and aftershocks" in the retail sector that would "endure for the coming year and beyond”, Rowe added.

Neil Wilson, chief market analyst at Markets.com, said: "Covid-19 has accelerated lots of consumer trends and it may just be the catalyst required to accelerate Marks and Spencer's transformation into a 21st century retailer.

"In particular it looks as though M&S has learnt just how important online is – so it's making its Ocado venture more central to the business."

Transformation plan

M&S was already undergoing a transformation plan led by its chief executive Steve Rowe which included cutting costs and closing some stores.

The firm said that due to the pandemic, those measures would be sped up under a programme called "Never The Same Again".

Those include buying clothing from fewer core suppliers, reducing the clothing and home ranges, as well as "the replacement of ageing stores".

"The trauma of the Covid-19 crisis has galvanised our colleagues to secure the future of the business," said Rowe.

'Mountain of unsold stock'

The company has been facing increasing competition from fashion giants such as Primark on the High Street and Asos on the internet in recent years.

To add to its problems, M&S's non-food stores have been forced to shut under the lockdown measures.

As a result, it faces a "mounting backlog of unsold stock" in its warehouses, it said.

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said: "Overall, M&S was facing challenges before coronavirus and these have simply been exacerbated.

"Within the difficulties there are real opportunities too, and the group appears to have a lot of the right ideas, but the next chapter really needs to be about execution."

 

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